Introduction to Business – Small Businesses Test

True or False: the process of starting, organizing, managing, and assuming the responsibility for a business is called capitalism

False

True or False: Everyone who owns a business is an entrepreneur.

False

True or False: In the United States, nearly as many small businesses close as begin each year.

True

True or False: U.S. businesses with just a single owner and no staff account for over $600 billion in annual sales.

True

True or False: It is easier for a small business to meet the precise needs of customers than a large business.

True

True or False: Many small businesses fail simply because they are not located in the right spot.

True

True or False: The most important step in starting a business is preparation.

True

True or False: Once a business plan is written, it should never be revised and should never be updated.

False

True or False: The most popular use of business plans is to persuade lenders and investors to finance the venture.

True

Which of the following is probably the LEAST important factor in becoming an entrepreneur?

living in a major US city

In the United States, women own this percentage of small business.

35%

Successful entrepreneurs tend to have all of the following characteristics EXCEPT

hesistant

Entrepreneurs

come from all age categories and educational backgrounds

About how many new businesses are created in the United States every year?

625,000

Most of the money needed to start a new business comes from

the entrepreneur and his or her family friends

Small businesses account for ____ of the U.S. gross domestic product each year.

more than half

Scrubbles laundry detergent has been on the market for years. The manufacturer of Scrubbles recently added a new ingredient to give the detergent extra cleaning power. This is an example of an

improvement

Of all new businesses,

about 1/3 are profitable, 1/3 do not make a profit but continue to operate, 1/3 loses money

According to the Small Business Administration, a small business is an independent business with fewer than ____ employees.

500

Which of the following does NOT describe a typical small business?

It is dominant in its field

Small business owners

usually get direct information from their customers about what they like and dislike

Small businesses have an advantage over big businesses when customers

want more individual attention

Location is important to small retail businesses because

-most retailers need good customer traffic to survive
-many potential customers will stay away if the business is not easy to find
-customers generally do not want to travel long distances to find what they need

The most successful small business owners

establish good working relationships with professionals such as bankers, lawyers, and accountants

Which element of a business plan discusses the entrepreneur’s short- and long-term goals for the business?

description of the business

Which of the following would NOT be discussed in the operations plan section of a business plan?

sales forecast

If you start a new business, you need information about

competitors, government regulations, and customers

The first step in developing a business plan is to

gather and review information

Short-term financing is obtained for a period of less than

one year

A(n) ____________________ is someone who takes a risk in starting a business to earn a profit.

entrepreneur

____________________ capital is money provided by large investors to finance new products and new business that have a good chance to succeed.

venture

A(n) ____________________ is an invention or creation that is brand new.

innovation

A designed change that increases the usefulness of a product, service, or process is called a(n) ____________________.

improvement

Almost all people starting small businesses have graduated from ____________________.

high school

The Small Business ____________________ is a U.S. government agency that helps small business owners obtain financing and other support for their companies.

administration

Members of the Service Corps of Retired ____________________ are retired local businesspeople who volunteer their services to counsel and mentor new business owners.

executives

A business ____________________ is a written description of a business idea and how it will be carried out.

plan

Most business plans are developed for ____________________ year(s).

one

The amount of money needed to open a business is called ____________________ financing.

start-up

Products or raw materials a business keeps on hand to do business are referred to as ____________________.

inventory

Money needed to pay for the current operating activities of a business is referred to as ____________________ financing.

short-term

The source of owner-supplied money depends on the business’s ownership structure. In a(n) ____________________, one person will supply the money.

proprietorship

____________________ financing is money needed for the main resources of a business that will last for many years.

long-term

Name at least three sources of funding for new businesses. Which is the most important?

Most of the money needed to start a new business comes from the entrepreneur and his or her family and friends. This is the most important source of small business funding. Other funding sources for new businesses include venture capital, loans from banks and other financial institutions, and credit given by businesses that sell products and services to the new business.

Why should all small business owners develop business plans even if they are not required to obtain financing?

By developing a business plan, the owner is forced to think about important activities, the amount of time they will take, and their cost. This process may identify potential problems. The plan also serves as a guide to keep the business on track.

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